FTD Companies, Inc. (Nasdaq:FTD) (“FTD” or the “Company”), a
premier floral and gifting company, today announced financial
results for the fourth quarter and full year ended December 31,
2017.
John C. Walden, FTD’s President and Chief Executive Officer,
commented, “We ended the year with financial results in-line with
our previously stated expectations. Our team is making significant
progress on the key tenets of our multi-year strategic plan,
announced in January 2018, which aims to rebuild FTD’s winning
customer brands, recreate a network of strong florist partners,
gain supply chain efficiencies and extend our business in
complementary non-floral categories. Consistent with our strategic
plan, we expect our operational results will not reflect meaningful
benefits from the plan in the near term, as we invest in new
capabilities and test new consumer offers in order to reverse
negative trends from prior years. We are currently working on
amending our financing arrangements to support these business
investments and our long-term plan. Looking ahead, we
continue to be optimistic about our opportunities to improve our
business performance, generate growth, and reclaim FTD’s heritage
as the world’s floral innovator and leader.”
Fourth Quarter 2017 Results
Consolidated revenues were $278.1 million for the fourth quarter
of 2017, a slight decrease of 0.9% compared to $280.7 million for
the fourth quarter of 2016, primarily due to a decrease in Consumer
segment revenues, partially offset by an increase in the
International and Provide Commerce segment revenues. Foreign
currency exchange rates had a $2.6 million favorable impact on
consolidated revenues during the fourth quarter of 2017.
Net loss was $153.5 million for the fourth quarter of 2017,
compared to net loss of $86.4 million for the fourth quarter of
2016. Net loss includes after-tax non-cash impairment charges
related to goodwill, intangible assets, and other long-lived assets
of $169.8 million and $84.0 million for the fourth quarters of 2017
and 2016, respectively. Also included in the net loss is a net tax
benefit of $13.8 million related to the enactment of the U.S. Tax
Cuts and Jobs Act. This benefit results primarily from the
application of the reduced U.S. federal tax rates to the deferred
tax balances, which is offset somewhat by the transition tax net of
allowable foreign tax credits.
Adjusted EBITDA was $15.6 million, or 5.6% of consolidated
revenues, for the fourth quarter of 2017, compared to $29.8
million, or 10.6% of consolidated revenues, for the fourth quarter
of 2016. Adjusted EBITDA is a non-GAAP financial measure. Please
refer to the tables in this press release for a reconciliation of
all non-GAAP financial measures.
Full Year 2017 Results
Consolidated revenues were $1.08 billion for the year ended
December 31, 2017, a decrease of 3.4% compared to $1.12 billion in
the year ended December 31, 2016. Changes in foreign currency
exchange rates negatively impacted consolidated revenues by $8.1
million in 2017. The remaining change was primarily due to a
decrease in Consumer segment revenues.
Net loss was $234.0 million for the year ended December 31,
2017, compared to a net loss of $83.2 million for the prior year.
Net loss includes after-tax non-cash goodwill, intangible asset,
and other long-lived asset impairment charges of $260.3 million and
$84.0 million for 2017 and 2016, respectively.
Adjusted EBITDA was $79.8 million, or 7.4% of consolidated
revenues, for 2017, compared to $119.8 million, or 10.7% of
consolidated revenues, for the prior year.
Segment Results
Provide Commerce Segment: Provide Commerce
segment revenues for the fourth quarter of 2017 were $140.7
million, a 1% increase compared to $139.0 million for the fourth
quarter of 2016. A 7.5% increase in consumer orders was partially
offset by a 6.1% decrease in average order value. Average order
value decreased $2.26 to $34.83 due to a shift in product mix and
was partially offset by lower discounts on products. Within the
Provide Commerce segment, fourth quarter 2017 revenues for the
Personal Creations business increased 10.1%. ProFlowers and Gourmet
Foods revenues decreased 9.6% and 1.1%, respectively, compared to
the prior-year quarter. Provide Commerce segment operating income
was $6.1 million for the fourth quarter of 2017 compared to
operating income of $13.1 million in the prior-year quarter.
Provide Commerce segment revenues of $530.9 million for 2017
were relatively flat compared to $529.7 million for 2016. Average
order value of $45.41 and consumer orders were essentially flat
compared to the prior year. Within the Provide Commerce segment,
2017 revenues for the Gourmet Foods business increased 6.1% and
revenues for the Personal Creations business increased 5.7%, while
revenues for ProFlowers decreased 5.0% compared to the prior year.
Provide Commerce segment operating income was $27.8 million, or
5.2% of segment revenues, for the year ended December 31, 2017,
compared to $40.5 million, or 7.6% of segment revenues, for the
prior year.
Consumer Segment: Consumer segment revenues for
the fourth quarter of 2017 decreased 12.8% to $61.5 million,
compared to $70.5 million for the fourth quarter of 2016. This
decline was primarily due to a 12.1% decrease in consumer orders
and a $0.69, or 1.0%, decrease in average order value to $70.36.
Consumer segment operating income was $3.2 million, or 5.2% of
segment revenues, for the fourth quarter of 2017, compared to $7.9
million, or 11.2% of segment revenues, for the prior-year
quarter.
Consumer segment revenues for 2017 decreased 11.4% to $258.1
million, compared to $291.3 million for 2016. This decline was
primarily due to a 10.8% decrease in consumer orders and a $0.53,
or 0.7%, decrease in average order value to $71.23. Consumer
segment operating income was $18.7 million, or 7.2% of segment
revenues, for year ended December 31, 2017, compared to $30.2
million, or 10.4% of segment revenues, for the prior year.
Florist Segment: Florist segment revenues for
the fourth quarter of 2017 increased 1.4% to $40.5 million,
compared to $39.9 million for the fourth quarter of 2016 primarily
due to an increase in products revenues. Florist segment operating
income was $10.7 million, or 26.5% of segment revenues, for the
fourth quarter of 2017, compared to $11.7 million, or 29.3% of
segment revenues, for the fourth quarter of 2016. Average revenues
per member increased 9.2% to $3,875 for the fourth quarter of 2017,
compared to $3,550 for the prior-year quarter.
Florist segment revenues for 2017 decreased 0.7% to $165.7
million, compared to $166.9 million for 2016. Services revenues
decreased due to lower order-related revenues and lower fees
associated with online and other services. Products revenues for
2017 increased slightly, primarily due to an increase in sales of
fresh flowers and other floral, plant and gift products to the
Company’s floral network members, which was partially offset by a
decrease in technology system sales. Florist segment operating
income was $46.5 million, or 28.0% of segment revenues, for the
year ended December 31, 2017, compared to $48.4 million, or 29.0%
of segment revenues, for the prior year. Average revenues per
member increased 5.9% for 2017 compared to the prior year.
International Segment: International segment
revenues for the fourth quarter of 2017 increased to $39.6 million,
compared to $35.9 million for the fourth quarter of 2016. On a
constant currency basis, International segment revenues increased
3.0%, or $1.1 million, due to a 2.4% increase in consumer orders
and a 0.4% increase in average order value. International segment
operating income was $4.8 million, or 12.1% of segment revenues,
for the fourth quarter of 2017, compared to $3.9 million, or 10.9%
of segment revenues, for the prior-year quarter. On a constant
currency basis, International segment operating income increased
$0.6 million, or 14.5%, for the fourth quarter of 2017 compared to
the prior-year quarter.
International segment revenues for 2017 decreased 4.4% to $146.0
million, compared to $152.7 million for 2016. On a constant
currency basis, International segment revenues increased 0.9%, or
$1.3 million. International segment operating income was $16.8
million, or 11.4% of segment revenues, for the year ended December
31, 2017, compared to $19.1 million, or 12.5% of segment revenues,
for the prior year. On a constant currency basis, International
segment operating income decreased 7.6%, or $1.5 million.
Balance Sheet and Cash Flow Highlights
Net cash provided by operating activities was $52.8 million for
the year ended December 31, 2017, compared to $76.2 million for the
prior year. Free Cash Flow was $48.8 million for the year ended
December 31, 2017, compared to $63.3 million for the prior year.
Free Cash Flow is a non-GAAP financial measure. Please refer to the
tables in this press release for a reconciliation of all non-GAAP
financial measures.
Cash and cash equivalents were $29.5 million as of December 31,
2017 compared to $81.0 million at December 31, 2016. At December
31, 2017, the Company had $192.0 million of principal indebtedness
outstanding, before reduction for deferred financing fees, compared
to $280.0 million at December 31, 2016. Such indebtedness includes
$140.0 million outstanding under a term loan and $52.0 million
outstanding under revolving loans. The reduction in debt for the
2017 period primarily reflects reduced cash holdings in addition to
use of cash from operating activities to pay down debt. See
Financing Activities section below regarding the current status of
the outstanding indebtedness.
Financing Activities
As previously announced on March 19, 2018, based on FTD’s
performance for the 2018 Valentine’s Day period and its outlook for
2018, as the Company works to implement its strategic plan
announced in January 2018, the Company anticipates that it may not
comply with the net leverage ratio and fixed charge coverage ratio
covenants in its credit agreement as of March 31, 2018. The
Company has entered into a Forbearance Agreement and Second
Amendment to its credit agreement with its lenders which includes
an agreement by the lenders to forbear from exercising remedies
available to them with respect to certain defaults until May 31,
2018. The Company remains in discussion with its lenders regarding
amendments to its credit agreement in order to enable the Company
to be in compliance with the financial covenants under such
agreement. The Company cannot give any assurance that these
discussions will be successful.
Steven D. Barnhart, FTD’s Executive Vice President and Chief
Financial Officer, commented, “As a result of changes in the
business and as we begin to execute our strategic business
transformation plan, we do not expect that we will be in compliance
with our debt covenants in all quarters of 2018, based on the
current credit agreement, which was entered into nearly four years
ago. We continue to work diligently with our lenders to amend our
existing credit agreement, and we intend to pursue a refinancing
well ahead of its maturity in September 2019. However, these
covenant issues have required us to include a going concern
disclosure in our financial statements issued today.
Notwithstanding this accounting conclusion, under the terms of the
forbearance agreement with our lenders, we believe we have the
ability to continue making timely scheduled quarterly principal and
interest payments under our existing credit agreement, and to meet
our other current financial obligations due to vendors. In
addition, we believe that we would not be required to include this
going concern disclosure if we were able to reach an agreement with
our banks that would provide adequate covenant relief, after giving
consideration to our operations and strategic plans over the
remaining term of our current credit agreement, or if we were able
to refinance the credit agreement.”
Business Outlook
Taking into account the full year impact of 2018 year-to-date
results, and the Company’s expectations for balance of year
results, FTD expects that its results for the full year will be
near the low end of its previously communicated guidance range for
consolidated revenues and Adjusted EBITDA. The previously
communicated ranges were as follows:
- Consolidated revenues of down 2% to an increase of 2% as
compared to 2017
- Consolidated Adjusted EBITDA of $52 million to $62 million
- Capital expenditures of approximately $35 million to $40
million
In connection with the outlook provided above, please note that
the seasonality of the Company's business impacts the quarterly
pattern of its profitability and cash flows from operations.
The Company is not providing 2018 guidance for net income, the
GAAP measure most directly comparable to Adjusted EBITDA, and
similarly cannot provide a reconciliation between its forecasted
Adjusted EBITDA and net income metrics without unreasonable effort
due to the unavailability of reliable estimates for certain items,
including transaction-related costs, impairments of goodwill,
intangible assets and other long-lived assets, and discrete tax
items. These items may vary significantly between periods and could
materially impact future financial results.
Conference Call
The Company will be hosting a conference call today, April 2,
2018, at 5:00 p.m. ET. Live audio of the call will be webcast and
archived on the investor relations section of the Company's website
at http://www.ftdcompanies.com. In addition, you may dial
877-407-0784 to listen to the live broadcast.
A telephonic playback and archived webcast will be available
through April 16, 2018. Participants can dial 844-512-2921 to hear
the playback. The passcode is 13676963.
About FTD Companies, Inc.
FTD Companies, Inc. is a premier floral and gifting company.
Through our diversified family of brands, we provide floral,
specialty foods, gifts and related products to consumers primarily
in the United States and the United Kingdom. We also provide floral
products and services to retail florists and other retail locations
throughout these same geographies. FTD has been delivering flowers
since 1910 and the highly-recognized FTD® and Interflora® brands
are supported by the iconic Mercury Man logo®, which is displayed
in approximately 35,000 floral shops in over 125 countries. In
addition to FTD and Interflora, our diversified portfolio of brands
includes the following trademarks: ProFlowers®, ProPlants®, Shari's
Berries®, Personal Creations®, RedEnvelope®, Flying Flowers®, Ink
Cards™, Postagram™, Gifts.com™, and BloomThat™. FTD Companies, Inc.
is headquartered in Downers Grove, Ill. For more information,
please visit www.ftdcompanies.com.
Cautionary Information Regarding Forward-Looking
Statements
This release contains certain forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, as amended, based on our
current expectations, estimates and projections about our
operations, industry, financial condition, performance, results of
operations, and liquidity. Statements containing words such as
“may,” “believe,” “anticipate,” “expect,” “intend,” “plan,”
“project,” “projections,” “business outlook,” “estimate,” or
similar expressions constitute forward-looking statements. These
forward-looking statements include, but are not limited to,
statements about the Company’s: ability to continue as a going
concern, repay indebtedness and invest in initiatives; expectations
about future business plans, prospective performance and
opportunities, including potential acquisitions; future financial
performance; revenues; segment metrics; operating expenses; market
trends, including those in the markets in which the Company
competes; liquidity; cash flows and uses of cash; dividends;
capital expenditures; depreciation and amortization; impairment
charges; tax payments; foreign currency exchange rates; hedging
arrangements; the Company’s products and services; pricing;
marketing plans; competition; settlement of legal matters; and the
impact of accounting changes and other pronouncements. Potential
factors that could affect these forward-looking statements include,
among others, the factors disclosed in the Company’s most recent
Annual Report on Form 10-K and the Company’s other filings with the
Securities and Exchange Commission (www.sec.gov), as updated from
time to time in our subsequent filings with the SEC, including,
without limitation, information under the captions “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors.” Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. Such
forward-looking statements are not guarantees of future performance
or results and involve risks and uncertainties that may cause
actual performance and results to differ materially from those
predicted. Reported results should not be considered an indication
of future performance. Except as required by law, we undertake no
obligation to publicly release the results of any revision to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. In addition, the Company may not provide
guidance of the type provided under “Business Outlook” in the
future.
Non-GAAP Measures
To supplement the Company’s consolidated financial statements
presented in accordance with generally accepted accounting
principles (“GAAP”), the Company uses the following non-GAAP
measures: Adjusted EBITDA and Free Cash Flow as measures of certain
components of financial performance. The Company’s definitions of
Adjusted EBITDA and Free Cash Flow, as set forth below, may be
modified from time to time.
Management believes that Adjusted EBITDA is an important measure
of operating performance because it allows for a period-to-period
comparison of the Company’s operating performance by removing the
impact of the Company’s capital structure (interest expense on
outstanding debt), asset base (depreciation, amortization and
impairment charges), tax consequences, other non-operating items,
and stock-based compensation. The Company further emphasizes the
importance of Adjusted EBITDA as an operating performance measure
by utilizing the Adjusted EBITDA measure as a basis for determining
certain incentive compensation targets for certain members of the
Company’s management. The Adjusted EBITDA measure also is used as a
performance measure under the Company’s senior secured credit
facility and includes adjustments such as the items defined above
and other further adjustments, which are defined in the senior
secured credit facility.
Management believes that Free Cash Flow provides a relevant
measure of the Company’s financial performance and ability to
generate cash in order to repay debt obligations, repurchase
shares, and fund acquisitions or other business initiatives.
Management believes that presenting these non-GAAP financial
measures provides additional information to facilitate comparison
of the Company’s historical operating results and trends in its
underlying operating results, and provides additional transparency
on how the Company evaluates its businesses.
In addition to the use of these non-GAAP measures by management
for the purposes outlined above, the Company believes Adjusted
EBITDA and Free Cash Flow are measures widely used by securities
analysts, investors and others to evaluate the financial
performance of the Company and its competitors.
Adjusted EBITDA and Free Cash Flow are not determined in
accordance with GAAP and should be considered in addition to, not
as a substitute for or superior to, financial measures determined
in accordance with GAAP. A limitation associated with the use of
Adjusted EBITDA is that it does not reflect depreciation and
amortization expense for various long-lived assets, impairment
charges, interest expense, income taxes, and other items that have
been and will be incurred. Each of these items should also be
considered in the overall evaluation of the Company’s results. In
addition, Adjusted EBITDA does not reflect capital expenditures and
other investing activities, and Free Cash Flow does not reflect
certain other expenditures, and these measures should not be
considered by themselves as measures of the Company’s operating
performance or cash generation capacity. An additional limitation
associated with Adjusted EBITDA is that the measure does not
include stock-based compensation expenses related to the Company’s
workforce. A further limitation associated with the use of this
non-GAAP financial measure is that it does not reflect expenses or
gains that are not considered reflective of the Company’s core
operations. Management compensates for these limitations by
providing the relevant disclosure of its depreciation and
amortization, impairment charges, interest and income tax expenses,
capital expenditures, stock-based compensation, and other items
within its financial press releases and SEC filings, all of which
should be considered when evaluating the Company’s performance.
A further limitation associated with the use of these measures
is that the terms “Adjusted EBITDA” and “Free Cash Flow” do not
have standardized meanings. Therefore, other companies may use the
same or a similarly named measure but exclude different items or
use different computations, which may not provide investors a
comparable view of the Company’s performance in relation to other
companies. Management compensates for this limitation by presenting
the most comparable GAAP measures: net income/(loss), directly
ahead of Adjusted EBITDA; and Cash Provided by/Used for Operations,
directly ahead of Free Cash Flow, within this and other financial
press releases and by providing reconciliations that show and
describe the adjustments made. In addition, many of the adjustments
to the Company’s GAAP financial measures reflect the exclusion of
items that are recurring in nature and will be reflected in the
Company’s financial results for the foreseeable future.
The Company also presents certain results for the International
segment on a constant currency basis. Constant currency information
compares results between periods as if foreign currency exchange
rates had remained consistent period-over-period. The Company’s
International segment operates principally in the U.K. Management
monitors sales performance on a non-GAAP basis that eliminates the
positive or negative effects that result from translating
international sales into U.S. dollars. Management calculates
constant currency by applying the foreign currency exchange rate
for the prior period to the local currency results for the current
period.
Definitions
(1) Segment operating income/(loss). The
Company's chief operating decision maker uses segment operating
income/(loss) to evaluate the performance of the business segments
and to make decisions about allocating resources among segments.
Segment operating income/(loss) is operating income/(loss)
excluding depreciation, amortization, litigation and dispute
settlement charges and gains, transaction-related costs,
restructuring and other exit costs, and impairment of goodwill,
intangible assets, and other long-lived assets. In addition,
stock-based and incentive compensation and general corporate
expenses are not allocated to the segments. Segment operating
income/(loss) is prior to intersegment eliminations and excludes
other income/(expense), net. Please refer to the tables in this
press release for a reconciliation of segment operating
income/(loss) to net income/(loss).
(2) Consumer orders. The Company monitors the
number of consumer orders for floral, gift, and related products
during a given period. Consumer orders are individual units
delivered during the period that were originated through our
consumer websites, associated mobile sites and applications, and
various telephone numbers. The number of consumer orders is not
adjusted for non-delivered orders that are refunded on or after the
scheduled delivery date. Orders originating with a florist or other
retail location for delivery to consumers are not included as part
of this number.
(3) Average order value. The Company monitors
the average value for consumer orders delivered in a given period,
which is referred to as the average order value. Average order
value represents the average amount received for consumer orders
delivered during a period. The average order value of consumer
orders within the Provide Commerce, Consumer, and International
segments is tracked in their local currency, the U.S. Dollar for
both the Provide Commerce and Consumer segments and the British
Pound for the International segment. The local currency amounts
received for the International segment are then translated into
U.S. dollars at the average currency exchange rate for the period.
Average order value includes merchandise revenues and shipping or
service fees paid by the consumer, less discounts and refunds (net
of refund-related fees charged to floral network members).
(4) Average revenues per member. The Company
monitors average revenues per member for floral network members in
the Florist segment. Average revenues per member represents the
average revenues earned from a member of the Company's floral
network during a period. Revenues include services revenues and
products revenues, but exclude revenues from sales to non-members.
Floral network members include retail florists and other
non-florist retail locations that offer floral and gifting
solutions. Average revenues per member is calculated by dividing
Florist segment revenues for the period, excluding sales to
non-members, by the average number of floral network members for
the period.
(5) Adjusted earnings before
interest, taxes, depreciation and amortization (“Adjusted
EBITDA”). The Company defines Adjusted EBITDA as net
income/(loss) before net interest expense, provision for/(benefit
from) income taxes, depreciation, amortization, stock-based
compensation, transaction-related costs, litigation and dispute
settlement charges and gains, restructuring and other exit costs,
and impairment of goodwill, intangible assets, and other long-lived
assets.
Litigation and dispute settlement charges and gains include
estimated losses for which the Company has established a reserve,
as well as actual settlements, judgments, fines, penalties,
assessments or other resolutions against, or in favor of, the
Company related to litigation, arbitration, investigations,
disputes, or similar matters. Insurance recoveries received by the
Company related to such matters are also included in these
adjustments.
Transaction-related costs are certain expense items resulting
from actual or potential transactions such as business
combinations, mergers, acquisitions, dispositions, spin-offs,
financing transactions, and other strategic transactions,
including, without limitation, (i) transaction-related bonuses and
(ii) expenses for advisors and representatives such as investment
bankers, consultants, attorneys, and accounting firms.
Transaction-related costs may also include, without limitation,
transition and integration costs such as retention bonuses and
acquisition-related milestone payments to acquired employees, in
addition to consulting, compensation, and other incremental costs
associated with integration projects.
(6) Free Cash Flow. The Company defines Free
Cash Flow as net cash provided by or used for operating activities
less capital expenditures, plus cash paid for transaction-related
costs, cash paid or received for litigation and dispute settlement
charges or gains, and cash paid for restructuring and other exit
costs.
Contacts
Investor Relations: Katie Turner
646-277-1228ir@ftdi.com
Media Inquiries: Amy Toosley858-638-4648pr@ftdi.com
|
FTD COMPANIES, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provide
Commerce segment |
|
$ |
140,733 |
|
|
$ |
138,982 |
|
|
$ |
530,926 |
|
|
$ |
529,733 |
|
Consumer
segment |
|
|
61,539 |
|
|
|
70,532 |
|
|
|
258,085 |
|
|
291,275 |
|
Florist
segment |
|
|
40,476 |
|
|
|
39,926 |
|
|
|
165,737 |
|
|
166,881 |
|
International segment |
|
|
39,550 |
|
|
|
35,854 |
|
|
|
145,966 |
|
|
152,700 |
|
Intersegment eliminations |
|
|
(4,213 |
) |
|
|
(4,627 |
) |
|
|
(16,686 |
) |
|
|
(18,590 |
) |
Total
revenues |
|
|
278,085 |
|
|
|
280,667 |
|
|
|
1,084,028 |
|
|
|
1,121,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
171,846 |
|
|
|
172,074 |
|
|
|
674,574 |
|
|
703,642 |
|
Sales and
marketing |
|
|
67,995 |
|
|
|
60,684 |
|
|
|
249,565 |
|
|
229,569 |
|
General
and administrative |
|
|
29,180 |
|
|
|
28,607 |
|
|
|
112,630 |
|
|
112,720 |
|
Amortization of intangible assets |
|
|
2,008 |
|
|
|
15,177 |
|
|
|
13,467 |
|
|
61,050 |
|
Restructuring and other exit costs |
|
|
122 |
|
|
|
9,528 |
|
|
|
2,179 |
|
|
11,758 |
|
Impairment of goodwill, intangible assets, and other long-lived
assets |
|
|
194,607 |
|
|
|
84,000 |
|
|
|
300,342 |
|
|
|
84,000 |
|
Total
operating expenses |
|
|
465,758 |
|
|
|
370,070 |
|
|
|
1,352,757 |
|
|
|
1,202,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(187,673 |
) |
|
|
(89,403 |
) |
|
|
(268,729 |
) |
|
|
(80,740 |
) |
Interest expense,
net |
|
|
(2,485 |
) |
|
|
(2,332 |
) |
|
|
(9,797 |
) |
|
(9,195 |
) |
Other income/(expense),
net |
|
|
(13 |
) |
|
|
(126 |
) |
|
|
311 |
|
|
|
1,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before income
taxes |
|
|
(190,171 |
) |
|
|
(91,861 |
) |
|
|
(278,215 |
) |
|
|
(88,257 |
) |
Benefit for income
taxes |
|
|
(36,710 |
) |
|
|
(5,413 |
) |
|
|
(44,174 |
) |
|
|
(5,066 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(153,461 |
) |
|
$ |
(86,448 |
) |
|
$ |
(234,041 |
) |
|
$ |
(83,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
loss per share |
|
$ |
(5.57 |
) |
|
$ |
(3.17 |
) |
|
$ |
(8.52 |
) |
|
$ |
(3.03 |
) |
Diluted
loss per share |
|
$ |
(5.57 |
) |
|
$ |
(3.17 |
) |
|
$ |
(8.52 |
) |
|
$ |
(3.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Shares
Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
27,557 |
|
|
|
27,254 |
|
|
|
27,484 |
|
|
|
27,483 |
|
Diluted |
|
|
27,557 |
|
|
|
27,254 |
|
|
|
27,484 |
|
|
|
27,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTD COMPANIES, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
29,496 |
|
$ |
81,002 |
Accounts receivable,
net |
|
|
26,028 |
|
|
26,659 |
Inventories |
|
|
25,356 |
|
|
24,996 |
Property and equipment,
net |
|
|
33,880 |
|
|
57,559 |
Intangible assets,
net |
|
|
181,965 |
|
|
272,798 |
Goodwill |
|
|
277,041 |
|
|
463,465 |
Other assets |
|
|
36,559 |
|
|
35,835 |
Total
assets |
|
$ |
610,325 |
|
$ |
962,314 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities |
|
$ |
161,799 |
|
$ |
157,693 |
Debt |
|
|
189,666 |
|
|
276,306 |
Deferred tax
liabilities, net |
|
|
30,854 |
|
|
85,932 |
Other liabilities |
|
|
13,482 |
|
|
14,656 |
Total
liabilities |
|
|
395,801 |
|
|
534,587 |
Total equity |
|
|
214,524 |
|
|
427,727 |
Total
liabilities and equity |
|
$ |
610,325 |
|
$ |
962,314 |
|
|
|
|
|
|
|
FTD COMPANIES, INC. |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(153,461 |
) |
|
$ |
(86,448 |
) |
|
$ |
(234,041 |
) |
|
$ |
(83,191 |
) |
|
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
5,694 |
|
|
|
21,597 |
|
|
|
33,474 |
|
|
|
85,099 |
|
|
Impairment of goodwill, intangible assets, and other long-lived
assets |
|
194,607 |
|
|
|
84,000 |
|
|
|
300,342 |
|
|
|
84,000 |
|
|
Stock-based compensation |
|
2,877 |
|
|
|
6,182 |
|
|
|
11,098 |
|
|
|
16,985 |
|
|
Provision
for doubtful accounts receivable |
|
577 |
|
|
|
487 |
|
|
|
2,092 |
|
|
|
3,423 |
|
|
Amortization of debt issue costs |
|
340 |
|
|
|
340 |
|
|
|
1,360 |
|
|
|
1,360 |
|
|
Impairment of fixed assets |
|
— |
|
|
|
325 |
|
|
|
— |
|
|
|
723 |
|
|
Deferred
taxes, net |
|
(38,863 |
) |
|
|
(11,473 |
) |
|
|
(56,177 |
) |
|
|
(25,992 |
) |
|
Gains on
life insurance |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,583 |
) |
|
Other,
net |
|
70 |
|
|
|
57 |
|
|
|
(26 |
) |
|
|
133 |
|
|
Changes
in operating assets and liabilities, net of acquisition related
purchase accounting adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
(1,964 |
) |
|
|
(580 |
) |
|
|
(1,041 |
) |
|
|
(2,371 |
) |
|
Inventories |
|
5,654 |
|
|
|
2,486 |
|
|
|
(116 |
) |
|
|
461 |
|
|
Prepaid
expenses and other assets |
|
(1,989 |
) |
|
|
(5,025 |
) |
|
|
2,149 |
|
|
|
598 |
|
|
Accounts
payable and accrued liabilities |
|
57,378 |
|
|
|
62,736 |
|
|
|
(4,857 |
) |
|
|
(9,196 |
) |
|
Income
taxes receivable or payable |
|
(343 |
) |
|
|
4,859 |
|
|
|
(1,376 |
) |
|
|
6,741 |
|
|
Other
liabilities |
|
384 |
|
|
|
301 |
|
|
|
(64 |
) |
|
|
(946 |
) |
|
Net cash
provided by operating activities (a) |
|
70,961 |
|
|
|
79,844 |
|
|
|
52,817 |
|
|
|
76,244 |
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment and intangible assets |
|
(4,426 |
) |
|
|
(6,485 |
) |
|
|
(15,103 |
) |
|
|
(18,503 |
) |
|
Proceeds
from life insurance |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,946 |
|
|
Cash paid
for acquisitions, net of cash acquired |
|
(2,469 |
) |
|
|
— |
|
|
|
(2,469 |
) |
|
|
— |
|
|
Net cash
used for investing activities |
|
(6,895 |
) |
|
|
(6,485 |
) |
|
|
(17,572 |
) |
|
|
(16,557 |
) |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from long-term debt |
|
— |
|
|
|
— |
|
|
|
90,000 |
|
|
|
— |
|
|
Payments
on long-term debt |
|
(63,000 |
) |
|
|
(5,000 |
) |
|
|
(178,000 |
) |
|
|
(20,000 |
) |
|
Exercise
of stock options and purchases from employee stock plans |
|
473 |
|
|
|
933 |
|
|
|
1,515 |
|
|
|
2,237 |
|
|
Repurchases of common stock withheld for taxes |
|
(15 |
) |
|
|
(657 |
) |
|
|
(1,998 |
) |
|
|
(2,302 |
) |
|
Repurchases of common stock |
|
— |
|
|
|
(3,186 |
) |
|
|
— |
|
|
|
(15,221 |
) |
|
Net cash
used for financing activities |
|
(62,542 |
) |
|
|
(7,910 |
) |
|
|
(88,483 |
) |
|
|
(35,286 |
) |
|
Effect of foreign
currency exchange rate changes on cash and cash equivalents |
|
127 |
|
|
|
(639 |
) |
|
|
1,732 |
|
|
|
(1,291 |
) |
|
Change in cash and cash
equivalents |
|
1,651 |
|
|
|
64,810 |
|
|
|
(51,506 |
) |
|
|
23,110 |
|
|
Cash and cash
equivalents, beginning of period |
|
27,845 |
|
|
|
16,192 |
|
|
|
81,002 |
|
|
|
57,892 |
|
|
Cash and cash
equivalents, end of period |
$ |
29,496 |
|
|
$ |
81,002 |
|
|
$ |
29,496 |
|
|
$ |
81,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Information: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for interest |
$ |
1,954 |
|
|
$ |
1,792 |
|
|
$ |
8,215 |
|
|
$ |
7,556 |
|
|
Cash paid
for income taxes, net |
|
2,183 |
|
|
|
1,284 |
|
|
|
13,315 |
|
|
|
13,972 |
|
|
Cash paid
for restructuring and other exit costs |
|
1,221 |
|
|
|
380 |
|
|
|
8,360 |
|
|
|
2,374 |
|
|
Cash paid
for litigation and dispute settlement charges |
|
530 |
|
|
|
777 |
|
|
|
555 |
|
|
|
383 |
|
|
Cash paid
for transaction-related costs |
|
22 |
|
|
|
759 |
|
|
|
2,155 |
|
|
|
2,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) During
the first quarter of 2017, the Company adopted the accounting
guidance related to the presentation of stock-based compensation.
As such, the cash flows from operating and financing activities
have been adjusted for the quarter and twelve months ended December
31, 2016 by $297 and $705, respectively, related to excess tax
shortfalls from equity awards. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTD COMPANIES, INC. |
UNAUDITED SEGMENT INFORMATION |
(in thousands, except average order values,
average revenues per member, and average currency exchange
rates) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Provide
Commerce: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenues |
|
$ |
140,733 |
|
$ |
138,982 |
|
$ |
530,926 |
|
$ |
529,733 |
Segment
operating income(1) |
|
$ |
6,076 |
|
$ |
13,108 |
|
$ |
27,764 |
|
$ |
40,514 |
Consumer
orders (2) |
|
|
3,969 |
|
|
3,692 |
|
|
11,518 |
|
|
11,472 |
Average
order value (3) |
|
$ |
34.83 |
|
$ |
37.09 |
|
$ |
45.41 |
|
$ |
45.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenues |
|
$ |
61,539 |
|
$ |
70,532 |
|
$ |
258,085 |
|
$ |
291,275 |
Segment
operating income (1) |
|
$ |
3,215 |
|
$ |
7,884 |
|
$ |
18,675 |
|
$ |
30,210 |
Consumer
orders (2) |
|
|
819 |
|
|
932 |
|
|
3,408 |
|
|
3,821 |
Average
order value (3) |
|
$ |
70.36 |
|
$ |
71.05 |
|
$ |
71.23 |
|
$ |
71.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Florist: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenues |
|
$ |
40,476 |
|
$ |
39,926 |
|
$ |
165,737 |
|
$ |
166,881 |
Segment
operating income (1) |
|
$ |
10,720 |
|
$ |
11,684 |
|
$ |
46,477 |
|
$ |
48,406 |
Average
revenues per member (4) |
|
$ |
3,875 |
|
$ |
3,550 |
|
$ |
15,270 |
|
$ |
14,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
International: |
|
|
|
|
|
|
|
|
|
|
|
|
In
USD: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenues |
|
$ |
39,550 |
|
$ |
35,854 |
|
$ |
145,966 |
|
$ |
152,700 |
Segment
operating income (1) |
|
$ |
4,788 |
|
$ |
3,903 |
|
$ |
16,770 |
|
$ |
19,128 |
Consumer
orders (2) |
|
|
728 |
|
|
711 |
|
|
2,661 |
|
|
2,690 |
Average
order value (3) |
|
$ |
44.84 |
|
$ |
41.67 |
|
$ |
45.30 |
|
$ |
46.67 |
In
GBP: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment
revenues |
|
£ |
29,711 |
|
£ |
28,860 |
|
£ |
113,407 |
|
£ |
112,330 |
Average
order value (3) |
|
£ |
33.70 |
|
£ |
33.57 |
|
£ |
35.22 |
|
£ |
34.36 |
Average
currency exchange rate: GBP to USD |
|
|
1.33 |
|
|
1.24 |
|
|
1.29 |
|
|
1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FTD COMPANIES, INC. |
|
UNAUDITED RECONCILIATIONS |
|
(in thousands) |
|
The following tables contain reconciliations of
Adjusted EBITDA and Free Cash Flow to financial measures reported
in accordance with Generally Accepted Accounting Principles
("GAAP"). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF SEGMENT OPERATING INCOME TO
NET LOSS AND NET LOSS TO ADJUSTED EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Segment Operating Income (1) : |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provide
Commerce |
|
$ |
6,076 |
|
|
$ |
13,108 |
|
|
$ |
27,764 |
|
|
$ |
40,514 |
|
|
Consumer |
|
|
3,215 |
|
|
|
7,884 |
|
|
|
18,675 |
|
|
|
30,210 |
|
|
Florist |
|
|
10,720 |
|
|
|
11,684 |
|
|
|
46,477 |
|
|
|
48,406 |
|
|
International |
|
|
4,788 |
|
|
|
3,903 |
|
|
|
16,770 |
|
|
|
19,128 |
|
|
Unallocated expenses |
|
|
(12,171 |
) |
|
|
(20,385 |
) |
|
|
(44,599 |
) |
|
|
(49,899 |
) |
|
Impairment of goodwill, intangible assets, and other long-lived
assets |
|
|
(194,607 |
) |
|
|
(84,000 |
) |
|
|
(300,342 |
) |
|
|
(84,000 |
) |
|
Depreciation and amortization |
|
|
(5,694 |
) |
|
|
(21,597 |
) |
|
|
(33,474 |
) |
|
|
(85,099 |
) |
|
Operating
loss |
|
|
(187,673 |
) |
|
|
(89,403 |
) |
|
|
(268,729 |
) |
|
|
(80,740 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(2,485 |
) |
|
|
(2,332 |
) |
|
|
(9,797 |
) |
|
|
(9,195 |
) |
|
Other
income/(expense), net |
|
|
(13 |
) |
|
|
(126 |
) |
|
|
311 |
|
|
|
1,678 |
|
|
Benefit
from income taxes |
|
|
36,710 |
|
|
|
5,413 |
|
|
|
44,174 |
|
|
|
5,066 |
|
|
Net loss (GAAP basis) |
|
$ |
(153,461 |
) |
|
$ |
(86,448 |
) |
|
$ |
(234,041 |
) |
|
$ |
(83,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (GAAP basis) |
|
$ |
(153,461 |
) |
|
$ |
(86,448 |
) |
|
$ |
(234,041 |
) |
|
$ |
(83,191 |
) |
|
Interest
expense, net |
|
|
2,485 |
|
|
|
2,332 |
|
|
|
9,797 |
|
|
|
9,195 |
|
|
Benefit
from income taxes |
|
|
(36,710 |
) |
|
|
(5,413 |
) |
|
|
(44,174 |
) |
|
|
(5,066 |
) |
|
Depreciation and amortization |
|
|
5,694 |
|
|
|
21,597 |
|
|
|
33,474 |
|
|
|
85,099 |
|
|
Stock-based compensation |
|
|
2,877 |
|
|
|
2,818 |
|
|
|
11,098 |
|
|
|
13,621 |
|
|
Transaction-related costs |
|
|
9 |
|
|
|
1,345 |
|
|
|
1,119 |
|
|
|
3,657 |
|
|
Litigation and dispute settlement charges |
|
|
— |
|
|
|
23 |
|
|
|
— |
|
|
|
763 |
|
|
Impairment of goodwill, intangible assets, and other long-lived
assets |
|
|
194,607 |
|
|
|
84,000 |
|
|
|
300,342 |
|
|
|
84,000 |
|
|
Restructuring and other exit costs |
|
|
122 |
|
|
|
9,528 |
|
|
|
2,179 |
|
|
|
11,758 |
|
|
Adjusted EBITDA (5) |
|
$ |
15,623 |
|
|
$ |
29,782 |
|
|
$ |
79,794 |
|
|
$ |
119,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO FREE CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities (GAAP Basis) |
|
$ |
70,961 |
|
|
$ |
79,844 |
|
|
$ |
52,817 |
|
|
$ |
76,244 |
|
|
Capital
expenditures |
|
|
(4,426 |
) |
|
|
(6,485 |
) |
|
|
(15,103 |
) |
|
|
(18,503 |
) |
|
Cash paid
for transaction-related costs |
|
|
22 |
|
|
|
759 |
|
|
|
2,155 |
|
|
|
2,802 |
|
|
Cash paid
for litigation and dispute settlements |
|
|
530 |
|
|
|
777 |
|
|
|
555 |
|
|
|
383 |
|
|
Cash paid
for restructuring and other exit costs |
|
|
1,221 |
|
|
|
380 |
|
|
|
8,360 |
|
|
|
2,374 |
|
|
Free Cash Flow (6) |
|
$ |
68,308 |
|
|
$ |
75,275 |
|
|
$ |
48,784 |
|
|
$ |
63,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) During
the first quarter of 2017, the Company adopted the accounting
guidance related to the presentation of stock-based compensation.
As such, the cash flows from operating and financing activities
have been adjusted for the quarter and twelve months ended December
31, 2016 by $297 and $705, respectively, related to excess tax
shortfalls from equity awards. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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